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It’s the start of Tax compliance Season and as with the last 3 quarters, there is a new FVU. NSDL came out with the latest utility on 25th April 2014 late evening
|Date Applicable from||FVU Version|
|From 26th April 2014||4.2 & 2.138|
|Till 25th April 2014||4.1 & 2.137|
Through the new FVU the following changes/validations have been brought in place:
Applicable Forms – 24Q
- A Deductor would now be able to file NIL returns for all years
- Since FVU 4.0, there was a lot of confusion on the filing on NIL returns
- It’s still not clear whether NIL returns need to submitted for other Forms
Unique Acknowledgement Number (UAN)
Applicable Forms – 27Q
- UAN refers to the acknowledgement received on successful filing of Form 15CA
- The new utility now allows a User to key in alphanumeric values from 12 to 15 characters
Validation in the absence of Deductee’s PAN
Applicable Forms – 24Q
- It’s well understood that, in case a Deductee doesn’t have a PAN, TDS needs to be deducted at higher of 20% or applicable rate.
- This point was not being checked till the previous FVU filings.
- Henceforth, the new Utility would now be validating this feature (i.e – If a Deductee does not have a PAN, and if the TDS deducted amount is less than 20%, the FVU would show an error
* Points expressed here are the Author’s interpretation. This cannot substitute Expert advice
Section 206AA requires TDS deduction at prescribed rates or @ 20% , if deductee does not submit valid PAN. The example below shows how to calculate TDS in such cases
|Taxable Salary for the year||270000|
|Less : Interest on home loan||-20,000|
|Less : Deductions under chapter VIA||-70000|
|B||Tax at Normal Rate||2000|
|Add : Education cess @ 3%||60|
|Total tax at normal rate||2060|
|C||Tax @ 20% u/s 206AA on [A]||36000|
|D||TDS to be deducted||36000|
|Higher of [B] or [C]|
It is apparnet from the above example that
- Total taxable income is to be calculated after allowing deductions under chapter VIA and home loan interest
- Tax is to be calculated at prescribed rate and education cess is to be applied
- Tax u/s 206AA is to be calculated on taxable income . No need to add education cess.
- Tax at normal rate or u/s 206AA, whichever is higher will be considered for TDS purposes
Will penal rate be applied even if taxable income is below Rs. 1.60 Lacs
- If taxable income of employee does not exceed the exemption limit but he has not submitted PAN, should TDS be deducted @ 20% u/s 206AA. ?
- In response to a query, eminent author Dr. V. K. Singhania has opined that, in such a case TDS has to be deducted @ 20%, In case PAN is furnished, the rate will be 0%. Ref –  18 CPT 117
- A contrary view is that the in such case there is no need to deduct TDS.
- However, CBDT may clarify this issue in the annual circular about TDS on salaries. ( Last such circular is Circular 01 /2010 ) .Deducting TDS in such cases will cause undue hardship to employees